Washington managed to avoid driving over the fiscal cliff yesterday, but only because it put in place a detour likely to bring us to the precipice in the not-so-distant future.
The plan approved by both houses of Congress has some good elements, as well as some bad and downright ugly ones:
The good: the deal delays deep spending cuts and maintains taxes on the middle class, while extending unemployment benefits.
The bad: the deal redefines middle class upward, robbing the federal government of some revenue.
The ugly: it allows the payroll tax holiday to lapse without offsetting aid to working Americans, meaning that the people most likely to spend the money will have less of it to spend. I've always found the payroll tax holiday troublesome because it cuts into revenue for Social Security, but it was an effective fiscal stimulus that should not have been allowed to end without some kind of alternative being put in place.
And while some are heaving a sigh of relief now that the cliff has been averted, it would be helpful for everyone to remember that nothing has been solved and that we will hit a new version of the cliff a few months down the road. If Congress is good at anything, it is at kicking the can.